AI • IOT • NETWORK EDGE

Kenton Williston: Welcome to IoT Chat, where we explore the trends that matter for consultants, systems integrators, and end users. I’m Kenton Williston, the editor-in-chief of insight dot tech.

Every episode I talk to a leading expert about the latest developments in the Internet of Things.

Today I’m talking about the revitalization of retail of with Trevor Sumner, the CEO of Perch.

Last year was a tough time for stores, but now in-person shopping has coming roaring back. What’s behind this trend? What can retailers do to keep the momentum going? And how can they bring together the best of online and physical retail to boost sales in both domains?

Trevor, I’m glad you’re here to answer these questions!

Trevor Sumner: Thank you. It’s great to be here.

Kenton Williston: And can you give me a quick summary of your role at Perch.

Trevor Sumner: Yeah, absolutely. My name is Trevor Sumner. I’m the CEO here at Perch. We do interactive retail displays that use computer vision to detect which products you touch and then wake up, like Minority Report, and automatically start telling you about it. I’m a longtime startup entrepreneur. I’ve been through a bunch of different high-growth companies that have IPO’d and mergered. And I started a company that grew to over a hundred people. It sold to the Blackstone Group. I’m an avid mentor at various different accelerators; occasional angel investor. I’m an adventure scuba diver and have scuba dived in every continent, including Antarctica. And I’m a native New Yorker.

Kenton Williston: Very exciting list there.

Trevor Sumner: Yeah. I like to get in there, man. Like, let’s start it. Let’s get them excited.

Kenton Williston: Excellent. So, over the course of the last three or four years, of course, things have changed a lot, particularly in the last 18 months or so. And I’m wondering how that has affected your business, and how the company has evolved?

Trevor Sumner: Yeah, absolutely. And COVID has been this technology accelerant in so many different ways. And while we are focused on in-store retail, and certainly some of our biggest clients were at the time—Macy’s and they closed their doors—they very much updated, and took a lot of the products off the shelves. Interestingly, now they just recently reported that foot traffic is back above 2019 levels, which is amazing. We focused a lot of our technology on grocery and mass retail, so that those investments really paid off, as these were effectively essential businesses and investing even more in the in-store experience. And so, COVID has been this really interesting technology accelerant, where people need more insight into what’s happening in-store in real time.

They need ways to connect to the shoppers without a sales associate, because there are a lot less sales associates. And they’re focused on other things, like inventory management and making sure that their products are on the shelves. But, because of that, we are seeing a lot of our customers thinking about how to use our technology to unify commerce and convert in-store shoppers into omnichannel shoppers. It’s been really exciting, and also really hard, because a lot of our partners were struggling with what these changes meant. And, of course, that vision has been changing almost month to month. So it’s been a very uncertain environment in which to operate, which is difficult as a leader of a company. But, at the same time, the technology acceleration has made our product set even more inevitable.

Kenton Williston: Yes. A couple of things I want to touch on there. One you talked about was, of course, the shift in balance towards e-commerce during the pandemic—for very obvious reasons people were not going into stores. And I’d like to know where you see that trajectory going now.

Trevor Sumner: It’s fascinating, right? I mean, I think there’s this narrative that brick and mortar is dead, which is absolute lunacy. Brick and mortar has been increasing 1.5% to 2% year over year. Last year we had a deadly pandemic, which meant that people were literally risking their lives to go into stores. And yet, it was a flat year for physical retail. Last year was a boon to e-commerce. I think this year it will be harder to maintain and extend those gains. In fact, CoreSite just reported that e-commerce penetration at department stores has declined year over year. So I think it’s uneven, too. I think it’s hard to talk about retail in generalities. So, like last year, grocery stores did very well. Target did very well, essential businesses, but also pets did extraordinarily well.

Sporting goods did well. Home goods. Home Depot showed a 30% year-over-year growth. To put that in perspective, just the growth at Home Depot is a Fortune 50 company, right? And you look at apparel, and that’s a whole different story in terms of the declines and the tough year that they had. So Amazon lost e-commerce share, even though they grew. They didn’t grow as fast as the brick-and-mortar stores that had e-commerce presence. And part of that is because the physical stores themselves delivered about 40% of e-commerce orders for the first time. And so, there’s certain industries where the store has to be a key part of the fulfillment and thinking through customer acquisition, ordering, and fulfillment as three different separate pieces of the puzzle that are blending in all these different ways. It becomes less and less helpful to think about e-commerce separate from brick and mortar.

Kenton Williston: Bunch of really interesting points there. As a first, I have to say that I feel like I contributed more than my fair share at a Home Depot over the last year. So, I bought a house in the middle of all this nonsense, and I’ve got to enjoy just the skyrocketing lumber prices and everything else. Similarly, I’m like, yeah, okay—I basically didn’t buy clothes last year. Why? I’m not going into the office. I could be in my pajamas all day if I want to. And so, having said that, I’m going to ask you a very general question about this idea of fulfillment, and where you see the role of the physical stores going forward. Is it mostly a fulfillment role? Is it mostly a discovery role? Is it different by sector? How’s that going to work out?

Trevor Sumner: So, let’s be very clear. When we talk about this future where—oh, wouldn’t it be amazing if I could just order anything? Any time—it just shows up at my door. We just got that last year. How terrible was it? How soulless was that experience? I bought a Christmas gift for my nephew that I never saw, never wrapped, wrote the card on Amazon. I’d don’t even know what it looked like. Probably some fake scribbled thing on a nondescript card. And didn’t really get to see him opening it, except kind of on Zoom. It was fine, but was it like, me shopping for a gift for him? No. We crave shopping to connect with products. This connection between people and products is fundamental to shopping. And so, I think increasingly we’re seeing people think about the store in the back of the house for fulfillment, but the front of house isn’t going away; it’s just going to be optimized in all these new and exciting ways, in part powered by IoT.

Having local Walmarts everywhere near you so that they can more optimally ship to you and think about last-mile fulfillment is really incredibly interesting on a business level for margins and for costs and optimizing profits. But it’s definitely not about optimizing the shopping experience. And so, I think brick and mortars can be extraordinarily strong on a continuous basis.

Kenton Williston: Your story about the Christmas present brings to mind the movie Brazil, and there’s this scene where the protagonist goes into an office, and there’s just this stack of prewrapped presents, and his boss is like, “Oh, here you go. Merry Christmas.” And it’s just like, so generic and anonymized. It definitely feels like that, I think, a lot of times when you’re shopping online—that it’s just a box, very impersonal. So, what can stores do to really enhance that connectivity with their products, and the very personalized experience?

Trevor Sumner: Yeah. So what we do at Perch, which I think is pretty fundamental, is the way to think about it is—online, the way you connect with products or learn about products is you click on it. And when you click on them, you go to what’s called a product detail page, or PDP in the industry. And it’s got videos, ratings, and reviews, and all this stuff that you’re looking for for research. And, fundamentally, we keep telling ourselves that the reason that we go in stores is because it’s better for product discovery, but, ironically, it’s also the only place where you don’t get that PDP product-level, detail information—which is why 87% of people start their product research online, because that’s where the content is.

So I see this future of in-store experience about bringing the same tools and digital into the store to combine the best of physical and digital shopping, right? So I can touch the product. I can look at the product. I can get the joy of holding it in my hands and looking at multiple different products at once in a physical and real way—in a way that a list of SKUs on Amazon just never gives me—but also deliver the product storytelling.

If you look at the brands that you really feel that emotional connection to, fundamentally those are stories that are being told. In fact, there was a recent study that went out, that you are 50% more likely to have an emotional connection with a brand in-store than online, if you just do e-commerce, right? Because you could do that storytelling and you have that physical kind of connection. And that’s a little bit why so many people are spending so much money to do all this brand advertising outside of the stores, is because they don’t have those capabilities in the store. So, fundamentally what we’re doing at Perch—we use computer vision to detect which products you pick up at the shelf. And the moment you pick it up, it wakes up and starts telling you about the product. So, it could be videos, ratings reviews, other complementary products—maybe comparing products in a product family, and providing all the tools you need to understand whether you really want that product and that product’s right for you. And so, to me, that product pickup is the same as clicking online, right? So you can click on a product online to get more information. Now those clicks at retail at the shelf that you do when you pick up a product and look at it, that’s an expression of interest. And now we can provide the right message at the right time, and help brands connect on a meaningful basis with the shoppers that are considering that.

Kenton Williston: Nice. So all this discussion about brand and the personal connection totally resonates with me. So, what it brings to mind for me immediately is the Fenty brand by Rihanna. And I really like that brand for a lot of different reasons. Most notably, it is products designed for a diverse target audience. So, it’s different skin tones, different body types, in a way that many other brands have been pretty terrible about addressing. So, just what the product does is pretty great and pretty exciting, but the fact that it’s coming from Rihanna and it’s got all that exciting creativity behind it really just adds to that brand story. And so I totally get how this concept applies to things like cosmetics or handbags, or if we’re talking about jewelry—these sorts of things that are, let’s say, more fashionable than functional in certain ways. But how would this work if you’re talking about, not something like clothing, but something that’s like a refrigerator? What’s the story element that drives those sorts of products?

Trevor Sumner: I think of what we do as product-level marketing. So I would ask you: which categories or products do you want to look at—ratings, reviews, videos, and complementary products—what would you say? All of them, right?

Kenton Williston: Yeah, pretty much right. And reflecting back on this last 18 months, that’s been a big part of the struggles I’ve had across the board—is, yes, I don’t want to go into the grocery store and get my groceries, but also there’s been so many different options for getting things delivered. Which one is the best one for me? And that’s been a little hard to determine.

Trevor Sumner: Yeah. So it sounds like you just bought a home, and you went to Home Depot to buy a fridge, and there are over 300 different fridges. They can’t fit 300 fridges on the showroom floor. So they tell you there are all these different configurations. And you’re like, “Ah, I kind of like, maybe LG—I don’t know.” And then within LG there are probably 20 different SKUs, and they’re different configurations. How do you pick a fridge? It seems like a really hard problem, right? But if you go online, you can actually visualize the different configurations of the fridge. Are you doing a double door? Single door? Where’s the ice maker? Where’s the water filter? What type of shelving configuration can you have? Is this efficient? What’s the freezer look like? What’s the balance between the freezer and the fridge? Can you multi-sub? Does it have different finishes that can match your kitchen? There’s so many different questions that you can answer that would be very hard to do with physical retail on its own.

Kenton Williston: Yeah, I think I accidentally picked a really good example, because, as you’re saying this I realize, “Oh, you know, I’ve actually been seeing online ads for the latest generation Samsung refrigerators.” And one of the things that they’re pushing is it’s very customizable in its appearance. You can mix and match all kinds of different color schemes. And somebody who is trying to figure out what to do with their kitchen—that’s a real big bonus that not everybody offers me. I can get the stainless steel or the gloss black or whatever, but this is a totally different idea, speaking of something that’s perfect for your space. And I’m like—yes, that’s great, love it.

Trevor Sumner: So, that’s a simple example of, “Hey! I click on a product—tell me about what options I have available to me.” Now, we deliver a lot of media and product-level media out there in the market. But also what we’re seeing is, there are all these tools online that help you decide what your needs are. So, let’s stick with the fridge for a second. So, in an ideal experience you go into Home Depot and you fill out a quiz. Because if you talk to a sales associate, they’re going to ask you a bunch of questions. Maybe they’re going to push something on you because it’s the one that they’re familiar with, or it’s the one in stock, it’s one on sale, it’s the one they get the biggest commission on. You never know. But what if there was a tool that said, “Okay, tell me, how many people are you feeding? How many kids do you have? How important is the freezer? Where do you live?”

And then it said, “Based on your answers to the questions we just asked, here are 10 fridges that we recommend. And here’s how they compare, so you can do it.” Now, that sounds like a wonderful experience—to try and figure out which fridge you are, and to give you the confidence that you need. We’re picking fridges—which is frankly a little bulkier than generally what we do, because you’re not touching fridges, but we actually have done a fridge concept.

But think about that for every product set. You mentioned beauty. We’re working with Johnson & Johnson to bring their Skin360 tool. So, it’s a front-facing camera that looks at your face and says, “Okay, based on your skin type, based upon your wrinkles or your sun spots, dry spots. . .” It does an analysis of many different points of your face and asks you a couple questions about what you care about most, and says, “Here are the products that we would recommend.” Whether it’s finding the right refrigerator, the right electronics, the right computers, the right TV, the right deodorant—all of these things require some digital content. And we’re trying to bring that to the shelf where 85% of transactions occur.

Kenton Williston: You threw in a kind of an oddball example there in some ways—of deodorant. So far in our conversation I’ve been envisioning what purchase is doing is being centered around high-consideration, high-cost sorts of products. Obviously deodorants don’t really fit in there. So, presumably you’re doing business with brands that have these sorts of consumer packaged goods. And what does the model look like there, and how is it different from something like cosmetics?

Trevor Sumner: Yeah. So, our business model is basically per screen. And we generate—what’s amazing about our approach is it typically generates somewhere between 30% and up to 180% sales lift. So about 80% sales lift on average; 80% sales lift has to equal the cost of the program, which happens to be somewhere between $150 to $300 per month per screen, depending on volumes and some other things. And so you’re right that there are certain categories that lend themselves very clearly to this type of technology—anything high margin, high education, high brand building in mass retail and CPG. And interestingly, grocery is our fastest growing market segment. It’s really about beauty. It’s about baby. It’s about pets, and it’s about health. And going full circle to, “Hey, what about deodorant? What does that look like?”

Do you know what’s in your deodorant? There’s a lot of talk about aluminum, and is aluminum good or bad for you? And how important are natural ingredients? And how often do you sweat? Do you need something that’s a deodorant, or also an antiperspirant? Do you care about natural ingredients? We could see this going lots of different ways. Now, to be fair, we haven’t done anything in the deodorant side of the house, but, again, this is just the role of education. And right now it’s fascinating that the physical store, where 85% of transactions occur, is this digital desert of product content where you can research these things, and that’s changing.

And so one of the things that’s really remarkable about what we’re seeing right now is about 1% of digital media spent is happening in-store, where these 85% of transactions occur. So, there’s a multibillion-dollar shift to driving digital in-store, and it’s going to be done in a couple different, interesting ways. I think there are going to be digital signage networks that are on the walls, that are basically banner ads for promotional space for people. There’s going to be digital at the shelf that’s contextual, reacting to what products you touch, or it’ll do front-facing cameras that do demographic segmentation. So, me as a 45-year-old male will get a different message than a Gen Z woman.

So it’ll be exciting, it’ll be personalized, it will be contextual. And right now there are billions of dollars being spent going into this, because the store is a giant black box—not just for media, but also for data and what people are doing. And so I think that’s the other area that’s really driving this expansion—is to start understanding how shoppers shop in-store. And now that we’re shining a light on that with sensors and IoT data, it turns out some of the things that we’ve always thought to be true aren’t really true. And it’s causing us to rethink the way we merchandise and market. And it’s going to lead to a revolution in the way we think about the in-store experience.

Kenton Williston: Do you have an example of bad assumptions that people have been using for years that are being totally debunked now?

Trevor Sumner: Yeah, so I think that the greatest one—we just did a large launch with Purina across 200 grocery stores, and they did an endcap. So, that’s the area at the end of an aisle. It’s really valuable space. And there’s something called a planogram, and basically it’s a diagram of where you put your products on the shelf. Is it on the top shelf, on the mid-shelf; is it on the left, is it on the right, et cetera.

And if you ask anybody in retail what is the most valuable area of the planogram on an endcap, they will say: eye level. In fact, they’ll either say “eye level,” or they’ll say the same thing—which is, “eye level is buy level.”

It’s such an ingrained axiom that there’s an idiom for it: “eye level is buy level.” And so I asked them, “Is it true?” All of a sudden they’re like, “I don’t know. That’s what I’ve always been told.” And the answer is, while it is true that being at eye level is beneficial—it shows about a 25% engagement and sales lift to be at eye level versus at middle or lower, on the lower shelf—it turns out that the edges of the endcap are more valuable. They show about 35% to 50% sales and engagement lift. And nobody knew that, in part because earlier studies just looked at the aisle, and because the aisle just draws along—period—there aren’t really edges. And we showed this to Purina. We showed this to our customers, and they’re like, “Oh my God—this changes everything about how we think about planograms, and which products to put in which positions and how we merchandise.”

And that’s just one example of just changing norms. There are a lot of areas where we just agree we have no visibility into. So, I’ll give another example, is Johnson & Johnson. When we launched with them, they had Kerry Washington for Neutrogena and Jennifer Aniston for Aveeno. And then, on the bottom shelf, they had Clean & Clear, which was a new launch for them. And they said, “We don’t have a spokesperson, so we’re just going to use Instagram influencers. Can Perch tell us how much that hurts us, not to have a spokesperson?”

And so, we can look at the conversion ratio from click to screen to look at digital engagement and from click to sales, and take a look at that. And what we found was that the Instagram influencers were actually 22% better at driving them to engage with the screen, and drove 10% additional sales lift. I think the real answer to the influencer versus spokesperson game is it’s different for different people. If you’re a boomer or an old Gen X, like me, maybe Jennifer Aniston and Kerry Washington are better at converting me. But for Gen Z and millennials, maybe Instagram influencers are.

And with front-facing cameras, we can start testing these things, and actually just provide you a report and say, “Here’s the content that influences women and men by age, demographic.” You can look at sentiment analysis, eye tracking. All this stuff is coming, and it’s doing it in a way that’s seamless, that’s privacy protected. It’s all anonymous. It doesn’t record your identity. None of the video makes it into the cloud. So it can do this in a way that doesn’t sacrifice privacy, but helps the brands get all this data to a black box where most of their sales occur.

And that’s what’s really fascinating to me, is how all these sensors and data can shine the light into this black box and really change the way that we think and work.

Kenton Williston: So, Trevor, I’ve got to say, you’re doing good work to make me feel like an old man. You’re hearing about these influencers. So, I’ve got a 10-year old, and let me tell you, she cares a lot more about what Mr. Beast or some Minecraft speedrunner thinks about things, than a George Clooney or a Brad Pitt. That means nothing to her.

Trevor Sumner: Yeah. It’s changing generationally, and people bring—going back to e-commerce versus stores, 82% of millennials and Gen Z prefer to shop in stores. So stores continue to be the center of where it’s at; but we’ve got to merge some of these new behaviors, new desires, new demands for information. There’s a lot of social shopping that happens in-store, where people text their friends or take pictures and other things of products. How do we enable social shopping as fundamental to the physical shopping experience? There’s fascinating ways that you can do this using digital and screens and mobile, and integrating them all together.

Kenton Williston: Speaking of that integration, I think a key question that’s been lurking in the back of my mind is that, as we started talking about at the beginning of our conversation, in some ways this is nothing new. People have been talking about omnichannel and unified commerce and so forth for quite some time. In fact, I think it’s pretty well known at this point that a lot of people are doing comparison shopping. If they’re looking in, say, an electronics store, they’ll be checking what the alternatives are on Amazon, or even at the competitor’s store—they’ve got something in stock down the road.

But I think there’s still a ways to go to even take the existing systems and really make them a cohesive, coherent experience. Then all these additional sensors you’re talking about add another layer of complexity. So, what do you see as the path forward in bringing all of this rich data together and giving the customer a really pleasing, coherent experience that’s informed by all this data?

Trevor Sumner: Great question. I think it’s the reliance on the mobile phone—the over-reliance on the mobile phone has actually been a challenge for retailers. So, if I’m walking into Best Buy, and in order to get more information about a product I’ve got to pull up my mobile phone, where am I going to go? Is it the Best Buy app? Is it Amazon? Is Best Buy going to lose the sale because you forced me on my mobile, and now I’m going to do comparison shopping and I’m going to just pick on the best price?

And, of course, Best Buy has a price guarantee to help ensure that you get it while you’re there. But once you send them onto the mobile phone, you are sending them out of the shopping experience that you own and into to the World Wide Web, and it can be anything. Do you really want to keep them there? You want to have it heavily integrated.

And this is why all the major retailers are launching loyalty programs, shopper rewards. Target Red Circle, you get 2% cash back; or CVS CarePass, you get 20% off their generic products, because they want to keep you in the store, in their world, and financially pay you to do that. The question’s really more about how the data gets put together in a way that can make these experiences more cohesive. And I think that’s actually one of the things that COVID really accelerated—which is, to make this happen you have to have all the product content accessible via API, know the inventory in the store, online—all these different places. And that’s just a simple foundational layer that you need to deliver these experiences, and pre-COVID it was not there. And, because of COVID, so many stores had to launch “buy online, pick up in store.”

All of a sudden they’re like, “Oh, we absolutely need product information to be consistent. I need to know where it is in the store, what’s my inventory.” And be able to send orders per store, to online, delivered. And so they had to create these foundational layers, and that is going to accelerate our ability to provide these types of experiences to connect people between products and shoppers in more meaningful ways, because those basic building blocks have been built. And so that’s been a great acceleration as part of this.

Now the next part is, “Great—how do we determine context so that we give you relevant things?” So, we got all excited about Beacons about four or five years ago. And then people are like, “Actually, I really hate Beacons, because as I walk through your shop, you keep on just sending me, ’Here’s a coupon. Here’s a coupon. Buy this. Buy this.’“ And your phone keeps going off, and you’re like, “No, no, no, no! I need to find a way to turn this off.” Because great experiences need to be contextual, and they need to be relevant.

Tell me about the thing that I’m interested in. One of the reasons that people are launching these loyalty programs is so that I can connect your online shopping to your in-store shopping, and know on a product- and SKU-level basis. But ultimately, for us, we think that the most important signals—which products are you interested in right now? And those are the ones that you’re touching. And those are all the different types of signals that you can meld together, and they’re all sensor-based, IoT, to be able to bring that into store.

And so some of that will be connectivity to the mobile phone to get identity, to get integration to loyalty rewards and mobile apps. And that’s why there’s such a big push for mobile. At first for mobiles use, but long term to be this connectivity to the store—where you can scan products, take pictures of products. Where it dynamically sends you information on products that you’re interacting with, for cashierless checkout—all these types of things, the mobile phone is a really key piece there. But, to me, there’s a balance between not taking people out of the physical shopping experience and throwing them just into the mobile phone. It has to be blended together.

Again, all these building blocks are finally coming together with 4G and 5G in-store. Walgreens is sliding up 9,000 stores with 5G. It’s all for the ways these devices’ sensors can all start talking together in-store, and it’s going to lead to a Cambrian explosion of new ways to think about the merging of digital and physical commerce.

Kenton Williston: Yeah, I agree. It does lead me, though, to a question, which is, at the end of the day, what we’re talking about here is delivering an experience and a set of messages—the right time, the right place, to the right person. I’m curious how that actually works at Perch. You’ve got the technology platform. How does the messaging work? Do you have partners that you work with there? Is it something that’s done by your customers? How does that get constructed, and how is the success evaluated?

Trevor Sumner: Yes. So what’s amazing is all the real content that you need to help sell a product is already there. We don’t shoot Jennifer Aniston videos or Kerry Washington videos—they’re already there. Or the Instagram influencer videos, depending on which is most effective. Ratings and reviews—already there. Product comparison sheets, already there. If you just provide the basic levels of information that we can find online, the in-store experience gets enhanced five-fold. In fact, typically, compared to digital signage, which typically shows about 1% to 4% sales lift, we’re showing 30% to 80% sales lift.

Kenton Williston: Wow, yeah.

Trevor Sumner: It’s literally an order of magnitude better to provide that level of context. That context is key. So, the content is there. We work with agencies, we work with integrators, we work with people like Johnson & Johnson. We had talked about the Neutrogena Skin360 app, which scans your face and recommends skin products. They’ve already invested in that. The only question is, how do we bring it in-store? How do we meld it in a way that engages people in-store? A lot of people just try and put their website in-store, and it’s just super frustrating to a shopper because, if I wanted to go to your website, I would have gone to your website. The shopping behaviors and interaction modes are much different.

You’re not going to click six, seven levels deep into a website in-store. It’s got to be cleaner—the most important information has to be bubbled up immediately. You get two or three clicks on just product exploration. You’ll get more on things, like virtual try-on or skin analysis or needs-analysis quizzes, but you don’t have a lot. It’s got to be very quick. It’s got to deliver value immediately. One of the things that we find is, if you pick up a product and all of a sudden the product shows up on the screen, people are like, “Whoa, that’s really cool. What else can you tell me?” Again, we see about 10x the engagement on the screen than typical digital signage.

Kenton Williston: Yeah. That makes sense. Again, it all goes back to that question of context.

Trevor Sumner: Yeah. So I joke around with one of my investors that I’m just an arms dealer. I’m helping all brands to deliver their digital messages and connect with their customers. So, brands are bringing it in and competing, just like they do right now for the existing offerings. They’re competing for endcap space. They’re competing for inclusion and priority on websites’ search results pages. So it is intense competition between brands—always is, within the retailer, because the retailer owns the traffic, the retailer owns the shopper. So I think, short term, this is going to be driven a lot by brands; but long term, it’s going to be driven by retailers. If you look at it, many of the major retailers are investing very deeply in these types of digital networks. CVS Health has their HealthHUBs. Kroger is working with a company that they bought called 84.51°. There’s a company called Quotient Technology, working at Ahold, Target. Walmart changed their Walmart Media Network, which was buying advertising online; now it includes the ability to bundle in in-store screen impressions.

So it’s all blending together, and retailers are going to offer this as a service. Ultimately I think that’s the future. Right now, it’s Purina getting their own dedicated endcap. But I think the future is more like what Macy’s envisioned with their fragrance bars—is that every endcap, if you think about it like an Amazon search—you search for, let’s say, pet toys or dog toys, because I’ve got a pandemic puppy named Roxy. I search for pet toys and what comes up? It’s the most popular toys. It’s the Amazon-curated best toy, best-for-price—whatever categories to put in that’s curated. Then it’s advertising for brands to compete, to be part of that message. I think that’s what the future of endcaps at retail will be, which is: retailers will offer this up across multiple different brands.

Some of them they’ll curate, because they got to have their stars there. Some of them people will pay to tell their stories—to use it as a platform for experimenting within messaging. I think that, ultimately, is going to drive a lot of category lift. So, right now, I’m an arms dealer to individual brands and some retailers. Long term, I think retailers are going to be the arms dealers and provide this platform for interaction, meaningful engagement, and data to each of the brands.

Kenton Williston: Yeah, that’s really interesting. I say—just everything I’m hearing here, really poised again and again to—there’s a real need for rethink of the basic infrastructure of how physical retail works that will end up looking a lot more like e-commerce.

Trevor Sumner: Yeah, absolutely. I mean, this is my e-commerce analogy. Let’s look at how these businesses are managing themselves right now. Right now they have data about the people coming in the stores, the number of people—think of that in the e-commerce world as your unique visitors to your website. Then they’ve got data on the sales that happen. For a brand, you may just get sales in Texas. You don’t even get store-level sales. So, think about if you’re an e-commerce site that you just look at unique visitors in sales, and you have no idea where people go on your site—where they click, if they add stuff to cart, which content changes the way that they shop, how your search results or your category pages change buying patterns. None of that. That’s where we are with stores right now. That’s why I call it a black box. Now we can start instrumenting all of these things. If you think about what we are going to learn through that process, I mean, it’s phenomenal.

One of the things is, if you get a shopper to scan a QR code or something, now you can retarget them when they leave—because I scanned that puppy food’s QR code, you know I have a puppy. So when I leave, now you can market me as a puppy owner. We’re collecting all this data that is going to be extraordinarily valuable. I think that’s why, in part, I’m so excited about stores, because stores now are the dominant form and channel—what are they going to be when we make them more profitable, more efficient, more engaging, more educational, more integrated into personalization, “know what I want.” All those things—how much better are stores going to be? When you paint that picture, I couldn’t be more bullish on the bright future of brick-and-mortar retail.

Kenton Williston: Awesome. That seems like a great place to wrap our conversation. So, Trevor, I just want to thank you again for joining us today.

Trevor Sumner: Absolutely. Thanks for the great conversation.

Kenton Williston: And thanks to our listeners for joining us. To keep up with the latest from Perch, follow them on Twitter at perch experience and on LinkedIn at perch-interactive-inc.

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This has been the IoT Chat. We’ll be back next time with more ideas from industry leaders at the forefront of IoT design.

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